Have any questions:


Mail to [email protected]

In: Finance, Forex

Despite the massive selloff in equities this year and persistently high inflation, Dawn Fitzpatrick isn’t worried about a recession in the immediate future.

The chief executive and chief investment officer of Soros Fund Management argues the US consumer is in “extraordinarily” good shape, which will help the economy weather the Federal Reserve’s expected rate hikes.

While wage growth isn’t keeping up with inflation, Americans are still flush with enough cash to pay down their credit card balances.

According to Fitzpatrick when you look at the GDP number the really important point is the reason it shrank, because of net imports, which were negative, which means we’re importing a lot of goods from abroad.

That’s because consumer and corporate demand is robust. So there’s a silver lining in the reading of that GDP number. The bottom line is a recession is inevitable. It’s a matter of when. And when you look at what markets are pricing here, they’re pricing it fairly soon.

In the 2023 context, depending on which asset classes you’re looking at, I actually think markets might be wrong. The reason is that the consumer right here is in extraordinarily good shape.

We were talking with a big consumer bank in the US and of the accounts they had coming into the pandemic that had $1,000 to $2,000, today the average amount in those same accounts is $7,400. The cohort that was $2,000 to $5,000, today has $15,000 in their account.

For credit card companies, delinquencies are way below pre-pandemic levels. People are paying down their credit cards at levels that were way, way faster than pre-pandemic. Wage increases are not keeping up with inflation, but I do think consumers are in good shape.

There’s no doubt interest rates are going to go higher, and the Fed is going to move very quickly. That said, interest rates net of inflation are still negative. So monetary policy is still really easy.

Rate increases will slow the economy and will impact inflation, but this economy has some shock absorbers built in. I don’t think we’ll avoid a recession, but it will be further out than people expect.

How Can We Help You?

Need  to start your trading career with us today, or just looking for more information about our services?

For any inquiries please fill out the form below and we will get back to you!

Open chat
💬 Need Help?
Hello 👋
Do you need any help?